Rich Weiss wouldn't be surprised if the Federal Reserve cuts rates twice this year — and potentially before the November election. "The Fed historically has acted independently of the electoral cycle, the political cycle, and so we see no reason why it wouldn't be different this time," the chief investment officer of multi-asset strategies at American Century Investments told CNBC's Dominic Chu from the American Century Championship golf tournament. "We do fully expect a rate cut — or even two — at this point this year, depending again, on what comes out on the horizon with inflation factors.
" While politics may factor into market performance, he believes the Fed will "act independently." The comments from Weiss come as Wall Street continues to weigh whether the Federal Reserve will cut rates before year-end. The producer price index released Friday came in slightly hotter than expected for June, diverging from some recent signs pointing to a deceleration in inflation.
Weiss also weighed in on this year's market rally , as the group dubbed the "Magnificent Seven" continues powering the major indexes toward new highs on the prospect of artificial intelligence-fueled growth. But Weiss urges investors to diversify in this concentrated market. He cautioned that a sharp pullback isn't out of the question in the coming years based on past history.
"Don't follow the momentum, especially when it forces you to concentrate in literally a handful of stocks," he said. "You may do well in the short term, but nobody can tell when that's going to turn around and when it does turn, it tends to turn pretty harshly." He favors more value-oriented segments that look safer in the event of an economic deceleration.
This includes financials and utilities. Although a riskier bet, Weiss is also finding opportunities in the real estate sector, which he expects should recover as rates fall. Bonds also look attractive should yields continue to come down, and could outperform stocks through the end of 2024, he added.
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